Brokers meet in Mumbai to discuss on STT

MUMBAI: A few big brokers met in Mumbai recently to discuss about lobbying the government for a reduction in securities transaction tax (STT), according to a person aware of the meeting.

However, they decided to make a representation once a new finance minister takes charge from the present incumbent. Brokers, he said, were faced with a drastic reduction in business and feel high cost of transaction is one of the reasons keeping investors away.

The government has reduced STT on delivery based transactions by 20% to 0.1% in the Union Budget for FY13. This change is reportedly going to be effected on July 1 by NSE in line with the government directive.

However, premiums on derivatives transactions continue to remain high at Rs 17 per lakh of option premiums on sell side and Rs 125 per lakh on settlement value where the options are exercised.

The brokers feel these should be cut but the person quoted earlier gave no indication as to the extent of reduction brokers argued in favour of. Derivatives constitute roughly 80-90% of overall market turnover.